The Union Cabinet, on March 16, approved a bill for setting up a new Development Finance Institution (DFI). The bill, which spells out the mechanism for the DFI to raise funds, will be tabled in Parliament in the current Budget Session itself, Finance Minister Nirmala Sitharaman said while announcing the cabinet decision.
The DFI is part of the government’s push to create jobs and boost demand through a nationwide infrastructure push. The plan also includes a capital expenditure target of Rs 5.54 lakh crore for 2021-22, compared with a revised estimate of Rs 4.39 lakh crore for 2020-21.
“Infrastructure needs long term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing,” the Finance Minister had said in her Budget Speech on February 1.
“Accordingly, I shall introduce a Bill to set up a DFI. I have provided a sum of Rs 20,000 crores to capitalise this institution. The ambition is to have a lending portfolio of at least Rs 5 lakh crores for this DFI in three years’ time,” she had said.